Wednesday, February 21, 2007

More Merger News

More details are coming out about the proposed merger of XM and Sirius, particularly what it means to Howard fans who are currently subscribers. (Mel Karmazin promised no rate hikes and you can keep your existing radios.) The best summary of the latest info is by Mutt on SFN:


So the merger is pretty much a done deal and it's good news for Howard's fans. So lets move on to the future and back to the issue of whether or not Howard will come to the iPhone in particular and to the iPod in general. Here's a chart that Sirius put together to explain the case they're going to make to the FCC for the merger:

While the merger is certainly good news for the satellite industry, the chart Sirius uses to justify the merger also makes it very clear that satellite has a long way to go before it becomes a dominant form of media, like cable television for example. Even if the combined company doubles it's subscribers in the next couple years (something that may not be too difficult to do) it will still be a considerably smaller potential market than podcasting for iPods or traditional radio.

Sirius needed this merger. But this merger is not enough to save satellite radio in the long run. Hardware needs to improve, and this merger should help that, but even more importantly, Sirius must improve it's internet access. And that means making itself availible for the iPhone and iPod.

Right now, a satellite car radio is much better than a regular car radio. Traditional radio is hoping that HD radio will help, but I predict it will be a huge dud. The bigger danger, long term, is that it is increasingly likely that cars will start to be equipped with internet access. More and more cities are going to start being blanketed with WiFi (or WiMax). An internet equipped car might be better than a satellite radio car. Sirius needs to anticipate this development and make sure that people still have a reason to subscribe. That reason, of course, is by having exclusive content (Howard Stern) and make it easily availible.

Likewise, the new Apple TV is going to connect the internet to the television set, and this is a huge growth opportunity. Wouldn't it be great to be able to listen to Howard's show over your TV set in the morning?

Even with major hardware improvements, it is still likely that listening to satellite on portable iPod type devices is going to be a disappointment over using an iPod and time shifting. Apple's new iPhone is also likely to be a superior portable live listening device with additional phone features.

As I've pointed out before, Howard has been a big promoter of iPods all these years. I don't believe this is an accident. I think its part of a larger plan. Howard first had to save Sirius, which he did by bringing on millions of new subscribers. Then he had to destroy XM, which he effectively did by out selling subscriptions and forcing the merger.

But soon it's going to be time for Howard to cash on some of the free promotion he's been giving to the iPod and iPhone. Sirius and Howard need to experiment with some limited podcasting on Apples iTunes. And it needs to provide a widget so that you can listen to Howard's broadcast live off the internet with the iPhone.

When will that happen? Shortly after the FCC approves the merger.

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